Lack Of Demand

Jeremy Hobson interviews Larry Summers who, rightly, sees lack of demand rather than lack of consensus about the long-term budget situation as America's primary problem:

SUMMERS: I worry about a number of things with respect to growth. Most profoundly I worry about lack of demand in the United States. That means that factory capacity is unused, it means that buildings sit empty, it means that too many people are unemployed. And I look for measure that will serve to promote the level of demand in the United States. That's why using this moment to repair our infrastructure is so important. That's why I believe that the payroll tax cuts that put money in people's pockets and increased employers incentives to hire are so important. And that's why I believe that opening foreign markets and promoting U.S. exports which creates more demand is so important. And China is obviously an important part of that story.

Exactly so. The "normal" economic problem for a country to have is that nearly all its resources are being used, and yet people sill don't have as much stuff as they want. That's a tough problem to solve, and it's forgivable if at times policymakers struggle with it. But we have the problem of vast resources going unused. Factories that don't run all the time. Able-bodied men and women who aren't working. Construction equipment lying idle. Office and retail space vacant. It's a strange problem to have and it's stranger still to see a US Congress that's so uninterested in doing anything about it.